Origence's Tesla auto loan engine could link credit unions to other national retailers

LAS VEGAS — Consumers shopping for a Tesla now have the option to arrange credit union financing through Tesla's platform following a new partnership between the automaker and Origence.

The arrangement leverages a new loan origination and allocation system for Origence known as FI Connect — a brand that could serve other national auto retailers, Origence CEO Tony Boutelle told Automotive News .

Origence has historically served as a middleman connecting the nation's credit unions to auto dealerships for indirect auto loans through its CUDL platform; the company said Feb. 21 its partners included 20,000 dealerships and more than 1,100 credit unions.

Dealerships manually select a CUDL credit union serving their market as a prospect to receive the car deal the store is working. FI Connect automates the process for retailers seeking to work with credit unions on a national scale, Boutelle said at the 2024 NADA Show.

National retailers "don't want to have a dropdown box of 1,000 credit unions" on their software, Boutelle said. "And Tesla clearly did not want that."

Tesla at first wasn't interested in working with Origence, but the financial services provider's vision for FI Connect won the automaker over, Boutelle said.

Tesla lets its customers obtain a direct loan from a lender and bring that outside financing to a deal. But the automaker's software also offers buyers in 31 states the opportunity to seek a loan on the spot from what Boutelle said was a Tesla partner network of four large banks and his company.

If Origence can offer the best interest rate, Tesla's allocation engine will give it the deal, according to Boutelle. Once Origence receives the business, FI Connect uses its own allocation engine to send the transaction to a credit union, Boutelle said.

If the Tesla buyer is a member of an Origence credit union, the FI Connect software will give the loan to that institution, he said. If the consumer isn't a member of a partner credit union but could qualify for membership at one in the area, that lender will receive the business, he said.

"That allocation engine was a little complex to do," Boutelle said.

FI Connect collects the Tesla loan and sells it wholesale to the partner credit union, similar to how dealerships set up and then send traditional indirect loans to lenders. Boutelle said Origence was only able to establish FI Connect as a finance company with such capabilities following new National Credit Union Administration regulations within the past few years.

Boutelle said Origence was live on the Tesla platform for credit unions in seven states, including EV-heavy California. Five more states were likely before the end of the quarter, he said. It would probably need the entirety of 2024 to reach all 31 states, he said.

Tesla would like to lean on credit unions as a source of used-vehicle financing because many Teslas are coming off lease, Boutelle said. Origence also is having discussions with Tesla on the prospect of credit unions financing home chargers.

Boutelle estimated it could take a couple of weeks to 90 days to add a credit union to FI Connect, not counting testing.

But once a credit union has been added to the platform, they'd be available for any future national retailer that wants to offer credit union financing to auto shoppers.

These national FI Connect users could include "a big warehouse, Costco or something like that," or a national auto dealership group, Boutelle said. He said Origence was holding meetings during the show on such expansions.

Major national dealership groups use CUDL to connect with credit unions, but they're inquiring about FI Connect, Boutelle said.

"I wouldn't say that that's the preferred way to go," he said. "But they're asking to look at it and see if that might be a better way for them to do business."

Boutelle doubted smaller retailers, such as a single-store location, would want to depart from their current system of manually choosing a lender in favor of an automated selection. Smaller dealers tend to have "favorites" they prefer to use, he said.

"Credit unions are very local, just like dealers are very local," he said. "They kind of have like this relationship they've formed," he said.